CHICAGO, Aug. 3, 2012 /PRNewswire/ --
Note: Comparisons are year over year unless otherwise
noted.
2Q 2012 Highlights
- Smartphones as a percent of total devices sold increased to
51.9 percent from 39.6 percent; smartphone customers increased to
36.8 percent of postpaid customers from 23.1 percent.
- Postpaid ARPU (average revenue per user) increased 5 percent to
$54.42 from $51.84; total ARPU increased 6 percent to
$59.05 from $55.69.
- Service revenues increased 3 percent to $1,029.7 million.
- Postpaid gross additions increased 9 percent and postpaid churn
increased to 1.57 percent, resulting in a net loss of 48,000
postpaid customers. Postpaid customers comprised 94 percent
of retail customers.
- Prepaid gross additions increased 77 percent, driven by the
introduction in select Walmart stores of U Prepaid, a new no
contract wireless service, and prepaid churn decreased to 6.2
percent, resulting in a net increase of 20,000 prepaid
customers.
- Retail gross additions increased 23 percent; net loss of 28,000
retail customers, compared to a net loss of 58,000 retail
customers.
- Cell sites in service increased 2 percent to 7,932, of which
4,512 are owned towers.
- 4G LTE network covers 30 percent of customers; expect to reach
58 percent of customers by year end.
- Investment in the Los Angeles Partnership contributed
$19 million to equity in earnings of
unconsolidated entities, up from $14
million.
As previously announced, U.S. Cellular will hold a
teleconference Aug. 3, 2012 at
9:30 a.m. CDT. Interested parties may
listen to the call live by accessing the Investor Relations page of
www.uscellular.com or www.teldta.com.
United States Cellular Corporation (NYSE:USM) reported service
revenues of $1,029.7 million for the
second quarter of 2012, up 3 percent versus $1,002.0 million in the comparable period one
year ago. Net income attributable to U.S. Cellular shareholders and
related diluted earnings per share were $52.7 million and $0.62, respectively, for the second quarter of
2012, compared to $74.9 million and
$0.88, respectively, in the
comparable period one year ago.
"Our second quarter results were mixed," said Mary N. Dillon, U.S. Cellular president and CEO.
"We achieved a strong increase in postpaid gross customer
additions, evidence that we are increasing awareness and convincing
wireless consumers to switch to U.S. Cellular. Postpaid churn,
however, remained elevated, resulting in a net loss of postpaid
subscribers. We're focused on improving our subscriber results by
implementing aggressive strategies to offer high-demand devices,
expand our distribution options, and further differentiate U.S.
Cellular's superior customer service and benefits.
Profitability in the quarter declined, however, due to higher
device subsidies on 4G LTE handsets and expenses related to data
growth, expansion of the 4G LTE network and spending for our
multi-year initiatives.
"Our positive prepaid customer results reflect the success we've
had selling our U Prepaid service through Walmart since mid-May. We
will continue to find new ways to optimize our distribution and be
where our customers want to shop.
"Revenues grew in the quarter as smartphone penetration
continued to increase, contributing to strong data use and
increased average revenue per user. 4G LTE devices made up 17
percent of smartphones sold, and we expect to continue to migrate
customers to our expanding 4G LTE network by offering devices like
the highly acclaimed Samsung Galaxy S® III.
"To continue our positive momentum related to gross additions,
our newly launched marketing campaign, Hello Better, takes an
aggressive approach to encouraging our competitors' customers to
break free from unrewarding provider relationships. We'll be
utilizing a full range of traditional, social, retail and
grassroots tools to reach out to customers who are unhappy with
their current providers, and show them there's a better option with
U.S. Cellular."
Interest expense
The $12.8 million decrease in
interest expense was due primarily to the write-off of $8.2 million in unamortized debt issuance costs
in 2011 and lower interest rates on outstanding debt.
Guidance for year ending Dec.
31,
2012
Guidance for the year ending Dec. 31,
2012, as of Aug. 3, 2012, is
unchanged from the previous guidance provided on May 4, 2012. U.S. Cellular undertakes no duty to
update such information, whether as a result of new information,
future events, or otherwise. There can be no assurance that
final results will not differ materially from this
guidance.
|
|
2012
Estimated Results (1)
|
|
Service
revenues
|
$4,050-$4,150 million
|
|
Operating
income (2)
|
$200-$300
million
|
|
Depreciation, amortization and accretion
expenses,
|
|
|
and losses on asset disposals and
exchanges
|
|
|
and impairment of assets (2)
|
Approx.
$600 million
|
|
Adjusted
OIBDA (2) (3)
|
$800-$900
million
|
|
Capital
expenditures
|
Approx.
$850 million
|
|
|
|
|
(1)
|
These
estimates are based on U.S. Cellular's current plans, which include
a multi-year deployment of 4G LTE technology which commenced in
2011. New developments or changing conditions (such as
customer net growth, customer demand for data services or possible
acquisitions, dispositions or exchanges) could affect U.S.
Cellular's plans and, therefore, its 2012 estimated results.
|
(2)
|
The 2012
Estimated Results do not include any estimate for unrecognized net
gains or losses related to disposals and exchanges of assets or
losses on impairment of assets (since such transactions and their
effects are uncertain).
|
(3)
|
Adjusted
OIBDA is defined as operating income excluding the effects of
depreciation, amortization and accretion (OIBDA); the net gain or
loss on asset disposals and exchanges (if any); and the loss on
impairment of assets (if any). This measure also may be commonly
referred to by management as operating cash flow. This measure
should not be confused with Cash flows from operating activities,
which is a component of the Consolidated Statement of Cash
Flows. Adjusted OIBDA excludes the net gain or loss on asset
disposals and exchanges (if any) and loss on impairment of assets
(if any), in order to show operating results on a more comparable
basis from period to period. U.S. Cellular does not intend to
imply that any of such amounts that are excluded are non-recurring,
infrequent or unusual and, accordingly, they may be incurred in the
future. U.S. Cellular believes this measure provides useful
information to investors regarding U.S. Cellular's financial
condition and results of operations because it highlights certain
key cash and non-cash items and their impacts on cash flows from
operating activities.
|
Conference call information
U.S. Cellular will hold a conference call on Aug. 3, 2012 at 9:30 a.m.
CDT.
- Access the live call on the Investor Relations page of
uscellular.com or at
http://www.videonewswire.com/event.asp?id=88721.
- Access the call by phone at 877/407-8029 (US/Canada), no pass code required.
Before the call, certain financial and statistical information
to be discussed during the call will be posted to the Investor
Relations page of www.uscellular.com. The call will be archived on
the Conference Calls page of www.uscellular.com.
About U.S. Cellular
United States Cellular Corporation, the nation's seventh-largest
wireless carrier, provides a comprehensive range of wireless
products and services, excellent customer support, and a
high-quality network to approximately 5.8 million customers in 26
states. The Chicago-based company
employed approximately 8,600 people as of June 30, 2012. At the end of the second quarter
of 2012, Telephone and Data Systems, Inc. owned 84 percent of U.S.
Cellular.
Visit www.uscellular.com for comprehensive financial
information, including earnings releases, quarterly and annual
filings, shareholder information and
more.
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995: All information set
forth in this news release, except historical and factual
information, represents forward-looking statements. This includes
all statements about the company's plans, beliefs, estimates, and
expectations. These statements are based on current estimates,
projections, and assumptions, which involve certain risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Important factors
that may affect these forward-looking statements include, but are
not limited to: the ability of the company to successfully manage
and grow its markets; the overall economy; competition; the ability
to obtain or maintain roaming arrangements with other carriers on
acceptable terms; the state and federal telecommunications
regulatory environment; the value of assets and investments;
adverse changes in the ratings afforded our debt securities by
accredited ratings organizations; industry consolidation; advances
in telecommunications technology; uncertainty of access to the
capital markets; pending and future litigation; changes in income
tax rates, laws, regulations or rulings; acquisitions/divestitures
of properties and/or licenses; changes in customer growth rates,
average monthly revenue per user, churn rates, roaming revenue and
terms, the availability of handset devices, or the mix of products
and services offered by the company. Investors are encouraged to
consider these and other risks and uncertainties that are discussed
in the Form 8-K Current Report used by U.S. Cellular to furnish
this press release to the Securities and Exchange Commission
("SEC"), which are incorporated by reference herein.
United States Cellular
Corporation
|
Summary Operating Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
6/30/2012
|
|
|
3/31/2012
|
|
|
12/31/2011
|
|
|
9/30/2011
|
|
|
6/30/2011
|
Total population
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (1)
|
|
92,684,000
|
|
|
92,684,000
|
|
|
91,965,000
|
|
|
91,965,000
|
|
|
91,204,000
|
|
Consolidated operating markets (1)
|
|
46,966,000
|
|
|
46,966,000
|
|
|
46,888,000
|
|
|
46,888,000
|
|
|
46,888,000
|
Market penetration at end of
period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (2)
|
|
6.3%
|
|
|
6.3%
|
|
|
6.4%
|
|
|
6.5%
|
|
|
6.5%
|
|
Consolidated operating markets (2)
|
|
12.3%
|
|
|
12.4%
|
|
|
12.6%
|
|
|
12.7%
|
|
|
12.7%
|
All customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at
end of period
|
|
5,799,000
|
|
|
5,837,000
|
|
|
5,891,000
|
|
|
5,932,000
|
|
|
5,968,000
|
|
Gross
additions
|
|
290,000
|
|
|
285,000
|
|
|
306,000
|
|
|
299,000
|
|
|
257,000
|
|
Net
additions (losses)
|
|
(38,000)
|
|
|
(49,000)
|
|
|
(41,000)
|
|
|
(36,000)
|
|
|
(70,000)
|
|
Smartphones sold as a percent of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
total devices sold
(3)
|
|
51.9%
|
|
|
54.1%
|
|
|
52.5%
|
|
|
39.9%
|
|
|
39.6%
|
Retail customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at
end of period
|
|
5,542,000
|
|
|
5,570,000
|
|
|
5,608,000
|
|
|
5,621,000
|
|
|
5,644,000
|
|
Smartphone
penetration (3) (4)
|
|
36.8%
|
|
|
34.4%
|
|
|
30.5%
|
|
|
26.2%
|
|
|
23.1%
|
|
Gross
additions
|
|
277,000
|
|
|
273,000
|
|
|
298,000
|
|
|
284,000
|
|
|
226,000
|
|
Net retail
additions (losses) (5)
|
|
(28,000)
|
|
|
(34,000)
|
|
|
(13,000)
|
|
|
(23,000)
|
|
|
(58,000)
|
|
Net postpaid additions
(losses)
|
|
(48,000)
|
|
|
(38,000)
|
|
|
(20,000)
|
|
|
(34,000)
|
|
|
(41,000)
|
|
Net prepaid additions
(losses)
|
|
20,000
|
|
|
4,000
|
|
|
7,000
|
|
|
11,000
|
|
|
(17,000)
|
Service revenue components
(000s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
service
|
$
|
889,219
|
|
$
|
888,527
|
|
$
|
882,091
|
|
$
|
871,199
|
|
$
|
868,630
|
|
Inbound
roaming
|
|
86,363
|
|
|
80,132
|
|
|
93,353
|
|
|
107,810
|
|
|
82,760
|
|
Other
|
|
54,160
|
|
|
55,161
|
|
|
54,601
|
|
|
57,600
|
|
|
50,640
|
Total service revenues
(000s)
|
$
|
1,029,742
|
|
$
|
1,023,820
|
|
$
|
1,030,045
|
|
$
|
1,036,609
|
|
$
|
1,002,030
|
Total ARPU (6)
|
$
|
59.05
|
|
$
|
58.21
|
|
$
|
58.13
|
|
$
|
58.09
|
|
$
|
55.69
|
Billed ARPU (7)
|
$
|
50.99
|
|
$
|
50.52
|
|
$
|
49.78
|
|
$
|
48.82
|
|
$
|
48.28
|
Postpaid ARPU (8)
|
$
|
54.42
|
|
$
|
54.00
|
|
$
|
53.35
|
|
$
|
52.41
|
|
$
|
51.84
|
Postpaid churn rate
(9)
|
|
1.6%
|
|
|
1.6%
|
|
|
1.6%
|
|
|
1.5%
|
|
|
1.4%
|
Capital expenditures
(000s)
|
$
|
183,200
|
|
$
|
201,300
|
|
$
|
276,400
|
|
$
|
248,000
|
|
$
|
162,100
|
Cell sites in
service
|
|
7,932
|
|
|
7,875
|
|
|
7,882
|
|
|
7,828
|
|
|
7,770
|
|
|
(1)
|
Used only
to calculate market penetration of consolidated markets and
consolidated operating markets, respectively. See footnote (2)
below.
|
(2)
|
Market
Penetration is calculated by dividing the number of wireless
customers at the end of the period by the total population of
consolidated markets and consolidated operating markets,
respectively, as estimated by Claritas®.
|
(3)
|
Smartphones represent wireless devices which run on
an Android™, BlackBerry®, or Windows Mobile® operating system,
excluding tablets.
|
(4)
|
Smartphone
penetration is calculated by dividing postpaid smartphone customers
by total postpaid customers.
|
(5)
|
Includes
net postpaid additions (losses) and net prepaid additions
(losses).
|
(6)
|
Total ARPU
- Average monthly service revenue per user includes retail service,
inbound roaming and other service revenues and is calculated by
dividing total service revenues by the number of months in the
period and by the average total customers during the
period.
|
(7)
|
Billed
ARPU - Average monthly billed revenue per user is calculated by
dividing total retail service revenues by the number of months in
the period and by the average total customers during the period.
Retail service revenues include revenues attributable to postpaid,
prepaid and reseller customers.
|
(8)
|
Postpaid
ARPU - Average monthly revenue per postpaid user is calculated by
dividing total retail service revenues from postpaid customers by
the number of months in the period and by the average postpaid
customers during the period.
|
(9)
|
Represents
the percentage of the postpaid customer base that disconnects
service each month. This amount represents the average postpaid
churn rate for each respective quarterly period.
|
|
United
States Cellular Corporation
Consolidated Statement of Operations
Highlights
|
Three
Months Ended June 30,
|
(Unaudited, dollars and shares in thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease)
|
|
|
|
|
|
2012
|
|
2011
|
|
Amount
|
|
Percent
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
1,029,742
|
|
|
$
|
1,002,030
|
|
|
$
|
27,712
|
|
|
|
3%
|
|
|
Equipment
sales
|
|
74,658
|
|
|
|
74,152
|
|
|
|
506
|
|
|
|
1%
|
|
|
|
Total
operating revenues
|
|
1,104,400
|
|
|
|
1,076,182
|
|
|
|
28,218
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System
operations (excluding Depreciation,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization and accretion reported below)
|
|
243,227
|
|
|
|
227,801
|
|
|
|
15,426
|
|
|
|
7%
|
|
|
Cost of
equipment sold
|
|
191,700
|
|
|
|
170,833
|
|
|
|
20,867
|
|
|
|
12%
|
|
|
Selling,
general and administrative
|
|
435,053
|
|
|
|
423,953
|
|
|
|
11,100
|
|
|
|
3%
|
|
|
Depreciation, amortization and accretion
|
|
147,555
|
|
|
|
146,577
|
|
|
|
978
|
|
|
|
1%
|
|
|
Loss on
asset disposals and exchanges, net
|
|
2,702
|
|
|
|
2,922
|
|
|
|
(220)
|
|
|
|
(8%)
|
|
|
|
Total
operating expenses
|
|
1,020,237
|
|
|
|
972,086
|
|
|
|
48,151
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
84,163
|
|
|
|
104,096
|
|
|
|
(19,933)
|
|
|
|
(19%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
25,154
|
|
|
|
22,469
|
|
|
|
2,685
|
|
|
|
12%
|
|
|
Interest
and dividend income
|
|
845
|
|
|
|
748
|
|
|
|
97
|
|
|
|
13%
|
|
|
Gain
(loss) on investment
|
|
(3,728)
|
|
|
|
13,373
|
|
|
|
(17,101)
|
|
|
|
>(100)%
|
|
|
Interest
expense
|
|
(12,360)
|
|
|
|
(25,197)
|
|
|
|
12,837
|
|
|
|
51%
|
|
|
Other,
net
|
|
(229)
|
|
|
|
175
|
|
|
|
(404)
|
|
|
|
>(100)%
|
|
|
|
|
Total
investment and other income (expense)
|
|
9,682
|
|
|
|
11,568
|
|
|
|
(1,886)
|
|
|
|
(16%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
93,845
|
|
|
|
115,664
|
|
|
|
(21,819)
|
|
|
|
(19%)
|
|
|
Income tax
expense
|
|
34,597
|
|
|
|
34,732
|
|
|
|
(135)
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
59,248
|
|
|
|
80,932
|
|
|
|
(21,684)
|
|
|
|
(27%)
|
|
|
Less: Net
income attributable to noncontrolling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests,
net of tax
|
|
(6,563)
|
|
|
|
(5,993)
|
|
|
|
(570)
|
|
|
|
(10%)
|
|
Net
income attributable to U.S. Cellular shareholders
|
$
|
52,685
|
|
|
$
|
74,939
|
|
|
$
|
(22,254)
|
|
|
|
(30%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
84,707
|
|
|
|
84,930
|
|
|
|
(223)
|
|
|
|
—
|
|
Basic
earnings per share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Cellular shareholders
|
$
|
0.62
|
|
|
$
|
0.88
|
|
|
$
|
(0.26)
|
|
|
|
(30%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
85,061
|
|
|
|
85,397
|
|
|
|
(336)
|
|
|
|
—
|
|
Diluted
earnings per share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Cellular shareholders
|
$
|
0.62
|
|
|
$
|
0.88
|
|
|
$
|
(0.26)
|
|
|
|
(30%)
|
|
|
|
United
States Cellular Corporation
Consolidated Statement of Operations
Highlights
|
Six
Months Ended June 30,
|
(Unaudited, dollars and shares in thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease)
|
|
2012
|
|
2011
|
|
Amount
|
|
Percent
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
2,053,562
|
|
|
$
|
1,987,143
|
|
|
$
|
66,419
|
|
|
|
3%
|
|
|
Equipment
sales
|
|
142,959
|
|
|
|
146,131
|
|
|
|
(3,172)
|
|
|
|
(2%)
|
|
|
|
Total
operating revenues
|
|
2,196,521
|
|
|
|
2,133,274
|
|
|
|
63,247
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System
operations (excluding Depreciation,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization and accretion reported below)
|
|
476,391
|
|
|
|
445,404
|
|
|
|
30,987
|
|
|
|
7%
|
|
|
Cost of
equipment sold
|
|
378,736
|
|
|
|
367,488
|
|
|
|
11,248
|
|
|
|
3%
|
|
|
Selling,
general and administrative
|
|
877,297
|
|
|
|
863,662
|
|
|
|
13,635
|
|
|
|
2%
|
|
|
Depreciation, amortization and accretion
|
|
294,240
|
|
|
|
289,917
|
|
|
|
4,323
|
|
|
|
1%
|
|
|
Loss on
asset disposals
|
|
492
|
|
|
|
3,959
|
|
|
|
(3,467)
|
|
|
|
(88%)
|
|
|
|
Total
operating expenses
|
|
2,027,156
|
|
|
|
1,970,430
|
|
|
|
56,726
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
169,365
|
|
|
|
162,844
|
|
|
|
6,521
|
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
46,768
|
|
|
|
43,360
|
|
|
|
3,408
|
|
|
|
8%
|
|
|
Interest
and dividend income
|
|
1,888
|
|
|
|
1,597
|
|
|
|
291
|
|
|
|
18%
|
|
|
Gain
(loss) on investment
|
|
(3,728)
|
|
|
|
13,373
|
|
|
|
(17,101)
|
|
|
|
>(100)%
|
|
|
Interest
expense
|
|
(25,771)
|
|
|
|
(40,383)
|
|
|
|
14,612
|
|
|
|
36%
|
|
|
Other,
net
|
|
(27)
|
|
|
|
50
|
|
|
|
(77)
|
|
|
|
>(100)%
|
|
|
|
|
Total
investment and other income (expense)
|
|
19,130
|
|
|
|
17,997
|
|
|
|
1,133
|
|
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
188,495
|
|
|
|
180,841
|
|
|
|
7,654
|
|
|
|
4%
|
|
|
Income tax
expense
|
|
60,235
|
|
|
|
59,479
|
|
|
|
756
|
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
128,260
|
|
|
|
121,362
|
|
|
|
6,898
|
|
|
|
6%
|
|
|
Less: Net
income attributable to noncontrolling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests,
net of tax
|
|
(13,083)
|
|
|
|
(11,262)
|
|
|
|
(1,821)
|
|
|
|
(16%)
|
|
Net
income attributable to U.S. Cellular shareholders
|
$
|
115,177
|
|
|
$
|
110,100
|
|
|
$
|
5,077
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
84,638
|
|
|
|
85,206
|
|
|
|
(568)
|
|
|
|
(1%)
|
|
Basic
earnings per share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Cellular shareholders
|
$
|
1.36
|
|
|
$
|
1.29
|
|
|
$
|
0.07
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
85,076
|
|
|
|
85,739
|
|
|
|
(663)
|
|
|
|
(1%)
|
|
Diluted
earnings per share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Cellular shareholders
|
$
|
1.35
|
|
|
$
|
1.28
|
|
|
$
|
0.07
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States Cellular Corporation
Consolidated Balance Sheet
Highlights
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December 31,
|
|
|
|
|
2012
|
|
2011
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
437,624
|
|
$
|
424,155
|
|
|
Short-term
investments
|
|
100,738
|
|
|
127,039
|
|
|
Accounts
receivable from customers and other
|
|
430,761
|
|
|
441,821
|
|
|
Inventory
|
|
183,139
|
|
|
127,056
|
|
|
Income
taxes receivable
|
|
324
|
|
|
74,791
|
|
|
Prepaid
expenses
|
|
61,194
|
|
|
55,980
|
|
|
Net
deferred income tax asset
|
|
35,641
|
|
|
31,905
|
|
|
Other
current assets
|
|
11,197
|
|
|
10,096
|
|
|
|
1,260,618
|
|
|
1,292,843
|
|
|
|
|
|
|
|
|
Assets
held for sale
|
|
—
|
|
|
49,647
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
Licenses
|
|
1,484,202
|
|
|
1,470,769
|
|
|
Goodwill
|
|
494,737
|
|
|
494,737
|
|
|
Customer
lists, net
|
|
170
|
|
|
314
|
|
|
Investments in unconsolidated entities
|
|
175,663
|
|
|
138,096
|
|
|
Notes and
interest receivable – long-term
|
|
82
|
|
|
1,921
|
|
|
Long-term
investments
|
|
55,468
|
|
|
30,057
|
|
|
|
2,210,322
|
|
|
2,135,894
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
|
In service
and under construction
|
|
7,232,771
|
|
|
7,008,449
|
|
|
Less:
accumulated depreciation
|
|
4,349,653
|
|
|
4,218,147
|
|
|
|
2,883,118
|
|
|
2,790,302
|
|
|
|
|
|
|
|
|
Other
assets and deferred charges
|
|
71,194
|
|
|
59,290
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
6,425,252
|
|
$
|
6,327,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States Cellular Corporation
Consolidated Balance Sheet
Highlights
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
2011
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt
|
$
|
127
|
|
|
$
|
127
|
|
|
Accounts
payable
|
|
|
|
|
|
|
|
|
|
Affiliated
|
|
15,312
|
|
|
|
12,183
|
|
|
|
Trade
|
|
239,950
|
|
|
|
303,779
|
|
|
Customer
deposits and deferred revenues
|
|
202,485
|
|
|
|
181,355
|
|
|
Accrued
taxes
|
|
44,250
|
|
|
|
34,095
|
|
|
Accrued
compensation
|
|
51,305
|
|
|
|
69,551
|
|
|
Other
current liabilities
|
|
89,284
|
|
|
|
121,190
|
|
|
|
642,713
|
|
|
|
722,280
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale
|
|
—
|
|
|
|
1,051
|
|
|
|
|
|
|
|
|
|
Deferred liabilities and credits
|
|
|
|
|
|
|
|
|
Net
deferred income tax liability
|
|
840,484
|
|
|
|
799,190
|
|
|
Other
deferred liabilities and credits
|
|
247,692
|
|
|
|
248,213
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
880,623
|
|
|
|
880,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests with mandatory redemption
features
|
|
1,050
|
|
|
|
1,005
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
U.S.
Cellular shareholders' equity
|
|
|
|
|
|
|
|
|
Series A
Common and Common Shares, par value $1 per share
|
|
88,074
|
|
|
|
88,074
|
|
|
Additional
paid-in capital
|
|
1,399,010
|
|
|
|
1,387,341
|
|
|
Treasury
shares
|
|
(146,057)
|
|
|
|
(152,817)
|
|
|
Retained
earnings
|
|
2,403,312
|
|
|
|
2,297,363
|
|
|
|
Total U.S.
Cellular shareholders' equity
|
|
3,744,339
|
|
|
|
3,619,961
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
68,351
|
|
|
|
55,956
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
3,812,690
|
|
|
|
3,675,917
|
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
$
|
6,425,252
|
|
|
$
|
6,327,976
|
|
United
States Cellular Corporation
Schedule of Cash and Cash Equivalents and
Investments
(Unaudited, dollars in thousands)
The
following table presents U.S. Cellular's cash and cash equivalents
and investments at June 30, 2012 and December 31, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$
|
437,624
|
|
$
|
424,155
|
|
|
|
|
|
|
|
Amounts
included in short-term investments (1)(2)
|
|
|
|
|
|
|
Government-backed securities (3)
|
$
|
100,738
|
|
$
|
127,039
|
|
|
|
|
|
|
|
Amounts
included in long-term investments (1)(4)
|
|
|
|
|
|
|
Government-backed securities (3)
|
$
|
55,468
|
|
$
|
30,057
|
|
|
(1)
|
Designated
as held-to-maturity investments and recorded at amortized cost on
the Consolidated Balance Sheet.
|
(2)
|
Maturities
are less than twelve months from the respective balance sheet
dates.
|
(3)
|
Includes
U.S. treasuries and corporate notes guaranteed under the Federal
Deposit Insurance Corporation's Temporary Liquidity Guarantee
Program.
|
(4)
|
At June
30, 2012, maturities range between 12 and 21 months from the
balance sheet date.
|
|
|
|
|
United
States Cellular Corporation
Consolidated Statement of Cash
Flows
|
Six
Months Ended June 30,
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
Net
income
|
$
|
128,260
|
|
|
$
|
121,362
|
|
Add
(deduct) adjustments to reconcile net income to net
|
|
|
|
|
|
|
|
|
cash flows
from operating activities
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization and accretion
|
|
294,240
|
|
|
|
289,917
|
|
|
|
Bad debts
expense
|
|
30,659
|
|
|
|
27,677
|
|
|
|
Stock-based compensation expense
|
|
11,057
|
|
|
|
10,798
|
|
|
|
Deferred
income taxes, net
|
|
30,479
|
|
|
|
80,371
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
(46,768)
|
|
|
|
(43,360)
|
|
|
|
Distributions from unconsolidated entities
|
|
6,743
|
|
|
|
47,143
|
|
|
|
Loss on
asset disposals, net
|
|
492
|
|
|
|
3,959
|
|
|
|
(Gain)
loss on investment
|
|
3,728
|
|
|
|
(13,373)
|
|
|
|
Noncash
interest expense
|
|
902
|
|
|
|
9,152
|
|
|
|
Other
operating activities
|
|
321
|
|
|
|
1,044
|
|
Changes in
assets and liabilities from operations
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(13,383)
|
|
|
|
(35,907)
|
|
|
|
Inventory
|
|
(56,039)
|
|
|
|
(48,504)
|
|
|
|
Accounts
payable - trade
|
|
(20,987)
|
|
|
|
23,835
|
|
|
|
Accounts
payable - affiliate
|
|
3,129
|
|
|
|
5,102
|
|
|
|
Customer
deposits and deferred revenues
|
|
21,131
|
|
|
|
22,376
|
|
|
|
Accrued
taxes
|
|
85,327
|
|
|
|
11,525
|
|
|
|
Accrued
interest
|
|
149
|
|
|
|
111
|
|
|
|
Other
assets and liabilities
|
|
(67,203)
|
|
|
|
(75,128)
|
|
|
412,237
|
|
|
|
438,100
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
Cash used
for additions to property, plant and equipment
|
|
(430,225)
|
|
|
|
(265,394)
|
|
Cash paid
for acquisitions and licenses
|
|
(12,647)
|
|
|
|
(22,167)
|
|
Cash
received for divestitures
|
|
49,786
|
|
|
|
—
|
|
Cash paid
for investments
|
|
(45,000)
|
|
|
|
(20,000)
|
|
Cash
received for investments
|
|
45,000
|
|
|
|
75,000
|
|
Other
investing activities
|
|
(3,097)
|
|
|
|
2,691
|
|
|
(396,183)
|
|
|
|
(229,870)
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
Repayment
of long-term debt
|
|
(45)
|
|
|
|
(330,043)
|
|
Issuance
of long-term debt
|
|
—
|
|
|
|
342,000
|
|
Common
shares reissued for benefit plans, net of tax payments
|
|
(2,465)
|
|
|
|
1,264
|
|
Common
shares repurchased
|
|
—
|
|
|
|
(62,308)
|
|
Payment of
debt issuance costs
|
|
—
|
|
|
|
(11,229)
|
|
Distributions to noncontrolling interests
|
|
(643)
|
|
|
|
(877)
|
|
Other
financing activities
|
|
568
|
|
|
|
163
|
|
|
(2,585)
|
|
|
|
(61,030)
|
|
|
|
|
|
|
|
Cash
classified as held for sale
|
|
—
|
|
|
|
(5,687)
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
13,469
|
|
|
|
141,513
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
|
|
Beginning
of period
|
|
424,155
|
|
|
|
276,915
|
|
End of
period
|
$
|
437,624
|
|
|
$
|
418,428
|
United
States Cellular Corporation
Financial Measures and
Reconciliations
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended June 30,
|
|
Six
Months Ended June 30,
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
|
$
|
1,029,742
|
|
$
|
1,002,030
|
|
$
|
2,053,562
|
|
$
|
1,987,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
84,163
|
|
|
104,096
|
|
|
169,365
|
|
|
162,844
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization and accretion
|
|
|
147,555
|
|
|
146,577
|
|
|
294,240
|
|
|
289,917
|
|
Loss on
impairment of intangible assets
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Loss on
asset disposals and exchanges
|
|
|
2,702
|
|
|
2,922
|
|
|
492
|
|
|
3,959
|
|
|
Adjusted OIBDA (1)
|
|
$
|
234,420
|
|
$
|
253,595
|
|
$
|
464,097
|
|
$
|
456,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA margin (2)
|
|
|
22.8%
|
|
|
25.3%
|
|
|
22.6%
|
|
|
23.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
$
|
155,270
|
|
$
|
180,392
|
|
$
|
412,237
|
|
$
|
438,100
|
Deduct:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used
for additions to property, plant and equipment
|
|
|
(221,065)
|
|
|
(144,353)
|
|
|
(430,225)
|
|
|
(265,394)
|
|
|
Free
cash flow (3)
|
|
$
|
(65,795)
|
|
$
|
36,039
|
|
$
|
(17,988)
|
|
$
|
172,706
|
|
|
(1)
|
Adjusted
OIBDA is defined as operating income excluding the effects of:
depreciation, amortization, and accretion (OIBDA); the net gain or
loss on asset disposals and exchanges (if any); and the loss on
impairment of assets (if any). This measure also may be
commonly referred to by management as operating cash flow.
This measure should not be confused with cash flows from operating
activities, which is a component of the consolidated statement of
cash flows. Adjusted OIBDA excludes the net gain or loss on asset
disposals and exchanges and loss on impairment of assets, if any,
in order to show operating results on a more comparable basis from
period to period. U.S. Cellular does not intend to imply that
any of such amounts that are excluded are non-recurring, infrequent
or unusual, and accordingly, they may be incurred in the
future.
|
(2)
|
Adjusted
OIBDA margin is defined as adjusted OIBDA divided by service
revenues. Equipment revenues are excluded from the denominator of
the calculation since equipment is generally sold at a net loss,
and such net loss is included in adjusted OIBDA as a cost of
earning service revenues for purposes of assessing business
results. U.S. Cellular believes that this calculation method
is consistent with the method used by certain investors to assess
U.S. Cellular's business results. Adjusted OIBDA margin may
also be commonly referred to by management as operating cash flow
margin. U.S. Cellular believes this measure provides useful
information to investors regarding U.S. Cellular's financial
condition and results of operations because it highlights certain
key cash and non-cash items and their impacts on cash flows from
operating activities.
|
(3)
|
Free cash
flow is defined as cash flows from operating activities less Cash
used for additions to property, plant and equipment. Free cash flow
is a non-GAAP financial measure. U.S. Cellular believes that free
cash flow as reported by U.S. Cellular may be useful to investors
and other users of its financial information in evaluating the
amount of cash generated by business operations, after
consideration of capital expenditures.
|
SOURCE United States Cellular Corporation